Automatic enrollment, the defined contribution plan design feature considered essential for closing retirement savings shortfalls, has vastly accelerated participation in workplace retirement savings plans, as was expected when the Pension Protection Act was passed in 2006.
While the increase in plan participation bolsters the case for auto-enrollment’s utility, research recently presented to the American Economic Association calls into question the toll automatic enrollment is taking on the debt load of middle-class savers.
A study of civilian U.S. Army employees in the Thrift Savings Plan shows that participants automatically enrolled in the plan after the feature was implemented in 2010 are carrying higher automobile and mortgage debt.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
